Renting out a house – the Private Rental Act, reasonable rent, and termination

Short answer: When a private individual not acting in a business capacity rents out a house for residential purposes, the Private Rental Act often applies. It has different rules than standard residential leasing, including regarding termination and security of tenure.

When does the Private Rental Act apply?

The act applies when someone outside of business operations lets a residential property for purposes other than recreational use. It does not apply to subletting a rental apartment, and if multiple homes are rented out, normally only the first letting is covered.

Reasonable rent

The rent is assessed based on the property’s capital costs and operating costs. For furnished rentals, compensation for furniture and equipment may be added. It is therefore wise to document how the rent has been calculated.

Termination

For open-ended agreements, under the Private Rental Act, the landlord can normally terminate the agreement to the end of a month at the earliest three months after the notice is given. The tenant normally has a one-month notice period, and this right cannot be diminished by contract.

Security of tenure

The tenant does not have the same security of tenure as in standard residential leasing when the Private Rental Act applies. This is an important difference compared to many other rental relationships.

What should a house rental agreement contain?

• rental period and termination
• rent and what is included
• electricity, water, waste collection, and internet
• security deposit
• furniture and furnishings
• garden maintenance, snow removal, and ongoing care
• insurance
• smoking, pets, and subletting
• inspection upon move-in and move-out

Common mistakes

• using the wrong law in the agreement
• lacking a basis for the rent calculation
• unclear regulation of operating costs
• missing terms for the security deposit
• not performing an inventory list or inspection

See the Mallbutiken rental agreement template for renting out a house.

FAQ

Does the law also apply to holiday homes?

The Private Rental Act applies to lettings for purposes other than recreational use. Pure recreational rentals therefore need to be assessed separately.

Can the tenant terminate a fixed-term agreement?

The Private Rental Act grants the tenant rights that may also affect fixed-term agreements. Always check the specific situation.

Is permission required?

For a privately owned house, there is no permit system like there is for subletting a rental or tenant-owned apartment, but other regulations may affect the rental.

This article provides general information and does not replace legal advice.